U.S. GDP Shrank 3.8% Last Quarter, Most Since 1982

(Bloomberg) -- The U.S. economy shrank the most since 1982 in the fourth quarter of last year as consumer spending recorded the worst slide in the postwar era, a trajectory that’s likely to continue in coming months.

The 3.8 percent annual pace of contraction in the final three months of last year was less than forecast, with a buildup of unsold goods cushioning the blow. Without the jump in inventories, the contraction would have been 5.1 percent, the Commerce Department said today in Washington.

“It looks like the economy carried a lot of negative momentum into the first quarter,” former Fed Governor Laurence Meyer, said in an interview with Bloomberg Television.

The economy is likely to contract further after retailers and manufacturers from Starbucks Corp. to Boeing Co. this week announced plans to slash payrolls and cut production to get rid of unwanted goods. Today’s report will maintain the pressure on President Barack Obama to win quick congressional approval of a fiscal stimulus package in excess of $800 billion.

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